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Decision 4 Wool Inc. currently has two retail locations. Store A is located in the downtown core, while Store B is located in the local shopping mall. The most recent monthly income statement for Wool Inc. is given below: Total Store A Store B Sales $2,100,000 $1,300,000 $800,000 Less variable expense 1,260,000 $882,000 378,000 Contribution margin $840,000 $418,000 $422,000 Less traceable fixed expense 420,000 231,000 189,000 Segment margin $420,000 $187,000 $233,000 Less common fixed expense 350,000 210,000 140,000 Operating Income $70,000 $23,000 $93,000 Wool Inc. is considering closing Store A. If Store A is closed, one-fourth of its traceable fixed expenses would continue to be incurred. Store A has also become a space where local crafters come to socialize. The closing of Store A would result in a 20% decrease in sales in Store B as the local crafters would be upset and switch to a different brand. Wool Inc. allocates common fixed expenses on the basis of sales dollars and none of these costs would be saved if a store were shut down. Required: a. Should Wool Inc. close Store A? Show all calculations. b. The President of Wool Inc. does not understand your recommendation. Briefly support your recommendation by explaining why Store A should be kept open or shut down